High levels of construction combined with material and labour shortages have spurred house prices skyward
The “All Groups” Consumer Price Index increased by 1.3% in the December quarter and 3.5% over 2021, according to data released this week by the Australian Bureau of Statistics. Those results were a “mixed bag'' for the housing market, with a 4.2% price increase on new dwelling purchases by owner-occupiers a major contributor, according to the Real Estate Institute of Australia.
“High levels of building construction activity combined with shortages of materials and labour have contributed to two consecutive quarters of the largest rise in new dwelling prices since September 2020 following the introduction of the GST,” said REIA President Hayden Groves. “The quarterly changes for the analytical series of trimmed mean and for the weighted median, which exclude large one-off price impacts, were 1% and 0.9% for the December quarter, respectively, and 2.6% and 2.7% for the year. The annual changes for both are the highest since June 2014.”
Groves said that the “Housing Group” CPI increased by 1.8% for the December quarter and 4% for the year, consistent with current housing market conditions. The weighted increase in rents for capital cities was 0.1% for the quarter and 0.4% for the year.
“Rents fell again in Sydney and Melbourne, the fourth consecutive quarterly fall for Sydney and the third consecutive quarterly fall for Melbourne,” Groves said. “Rents across other capital cities, in line with population trends, continued to rise.”
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Groves said the CPI data indicated relatively stable monetary settings for 2022, with “no immediate pressures on interest rates.”
“Buyers of new dwellings can expect further pressures on costs as the sector works through its current backlog and supply-side disruptions,” he said. “However, these pressures are more likely to be transitory rather than embedded in the economy. This suggests some buyers and owners will continue to see relatively benign monetary policy settings for some time yet.”
